Overview

The oil price broke through $60 a barrel for the first time, reaching a high of $60.95 on June 27th. The rise reflected jitters about the impact of the presidential election in Iran, one of the world's main oil producers. However, the price subsequently fell back, declining below $58 on June 29th after an unexpected increase in American crude-oil inventories.

America's economy did better in the first three months of the year than previously estimated. GDP growth in the first quarter was revised up to an annual rate of 3.8%. Short-term prospects may also be brighter. Consumer confidence rose to a three-year high in June. The Conference Board, which compiles the index, thinks that this improvement will bolster business activity and the labour market over the next few months.

Despite big monthly falls in both industrial production and retail sales in Japan, the underlying picture looks more robust. Industrial output fell in May by 2.3% but was 0.9% higher than a year before. The value of retail sales dropped by 1.5% in May but was 2.7% higher than a year before.

In Germany, businessmen's animal spirits may be stirring. After falling for four consecutive months, the Ifo business-climate survey rose in June. Firms thought that current business conditions had got a bit better and were more optimistic about the next six months. However, German consumers have become more pessimistic, according to the GfK index for July, which fell for the third consecutive month.

Elsewhere in the euro area, there were mixed signals. France's businessmen became perkier in June according to INSEE's survey of sentiment among manufacturers, but Italy's businessmen grew more pessimistic amid the country's struggling economy, according to the ISAE survey of confidence.

In Britain, GDP growth in the year to the first quarter was revised down from 2.7% to 2.1%. A survey by the Confederation of British Industry indicated that retail sales declined sharply in the year to June: the fall was the steepest in the 22-year history of the survey. The survey suggests that the consumer slowdown, linked to the downturn in the housing market, is continuing. However, the number of new loans for buying houses rose slightly in May, indicating that the housing market may be stabilising.